2024 (11) TMI 419

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....hence without jurisdiction and bad in law. II) On facts and circumstances of the case the Assessing Office erred in denying the exemption u/s. 54 of the income tax Act,1961 on the ground that the investment in residential house in not in the name of the Assessee, but in the name of Spouse / relatives of the Assessee. III) On Facts and Circumstances of the case the learned C1T (Appeals), National Faceless Appeal Centre erred in confirming the addition of Rs. 51,10,050/- on account of long term capita! gain on Sale of residential immovable property assessed by the Assessing Officer u/s. 143(3) /147 of the Income tax Act, 1961. IV) Without prejudice to the above, on facts and circumstances of the case & on merits and judicial pronouncements the Assessee is entitled to full exemption of Long term capital gain u/s. 54 of the Income-tax Act, 1961 and accordingly there is no taxable Long term capital .gain assessable in Assessment Year 2011-12." 3. The assessee has taken the following additional ground also: - "1. The Ld. CIT(A) failed to appreciate that the residential property sold on 26/10/2010 was in joint name of deceased assessee and his wife M....

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....g Officer calculated the capital gain amount to Rs. 51,10,026/- and calculated tax amount to Rs. 9,74,005/-, after interest, the demand stands amounting to Rs. 27,48,810/-. Being aggrieved, the assessee filed appeal before the CIT(A). Ld.CIT(A) fully relied on the judicial precedents and upheld the assessment order. Being aggrieved, the assessee filed appeal before us. 4. The assesseeis deceased person. The appeal is filed through the legal heir of the assessee, Mr. Abdul Samad Shaikh. During the proceedings, the Ld.AR of assessee has filed the addition ground which is taken into consideration for the adjudication. 5. The Ld.AR for assessee has filed a written submission which is kept in the record. The Ld.AR first argued that the property is in joint name with assessee and his wife, copy of purchase deed APB pages 11-18 and the capital gain ought to have been assessed in hands of deceased assessee and his wife. The legal issue was taken in additional ground by the Ld.AR. 6. The Ld.DR argued vehemently and opposed the additional ground of the assessee as the ground is taken by the ld. AR first time before the bench. 7. The Ld.AR in argument placed computation in relatio....

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.....AR argued and placed that the entire addition as made on the basis of the order of Hon'ble High Court of Bombayin the case of Prakash vs ITO ITA No.15/2002dated 12/09/2008. The Ld.AR further mentioned that the claim of 54F is in assessee and his wife made by purchasing the new residential house and the entire amount was duly invested in the new property. The assessee and his wife both are the joint owners of the original property. So, both were also the owners of the new properties, i.e. flat No.508A and 509. In any case, the addition should be made in proper hands. In this connection, the Ld.AR relied on the order of the Hon'ble Apex Court in the case ofIncome-tax Officer vs CH Atchaiah 218 ITR 239 (SC). The relevant observation of the Hon'ble Apex Court is as below:- "This question has also been troubling the High Courts in the country. As a mailer of fact, the Patna and Andhra Pradesh High Courts have taken different views. Be that as it may, we may mention that the Patna High Court in Mahendra Kumar Agrawallav. 1TO [1976] 103 ITR 688, the Punjab and Haryana High Court in Rodamal Lalchand v. CIT [1977] 109 ITR 7, the Andhra Pradesh High Court in Choudry's case [198....

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....ed except by authority of law. Acquiescence cannot take away from a party the relief that he is entitled to where the tax is levied or collected without authority of law. The Constitution Bench of the Supreme Court in Amalgamated Coalfields Ltd. v. Janapada Sabha, AIR 1961 SC 964, held thus (page 965} : "It may be stated at the outset that the tax now impugned has been imposed by the local authority from March 12, 1935, and that the first occasion when its validity was attacked was in only 1957, though if the petitioners are right in their submissions their acquiescence might not" 9. The Ld.AR vehemently argued and also invited our attention in the written submission which is placed, in APB pages 110-118& filed before Ld.CIT(A) on dated 11-09-2023 during the appeal hearing. The relevant part of the submission is reproduced as below:- "3.5.Mukkamala Srihari Rao Vs Assistant Commissioner of Income-tax (ITAT Ranchi) Appeal Number: ITA No. 196/Ran/19 Date of Judgement/Order : 01/08/2022 Related Assessment Year : 2015-16 - In the instant case the assessee has applied the sale consideration received from sale of capital asset towards purchase of residential ....

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....r relatives out of the sale proceeds in question, with clear intention to transfer the property to those 'relatives. The Assessee, admittedly, had no. domain and/or right whatsoever on the said properties purchased in the names of the near, relatives. This fact itself, therefore, disentitled him to claim any exemption as there were various non compliances of the conditions as per the scheme of Section 54 and 54F of the IT Act as mentioned above. 17. In view of the above mentioned specific and categorical judgment of the jurisdictional High Court, claim of the exemption under section 54 is restricted to one property purchased in the name of the Assessee. Assessee's contention and further claim made in the written submission is not accepted as the Assessee failed divert capital gain received for the purpose of purchase of new property, in his own name, as envisaged in the scheme provided in section 54 of the I.T. Act. In view of the above detailed reasoning, claim of relief in terms of section 54 is restricted to the property .purchased in the name of the Assessee." 11. The Ld.DR further invited our attention on paras 6.18 to 7 of the appeal order, which are as un....

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....a person in the property. A property cannot be owned by two persons, each one having independent and exclusive right over it. Hence, for the purpose of Section 9, the owner must be that person who can exercise the rights of the owner, not on behalf of the owner but in his own right." The learned Judge observed that "it is true that equitable considera-tions are irrelevant in interpreting tax laws. But, those laws, like all other laws, have to be interpreted reasonably and in consonance with justice". Again at page 577, it was held that "for determining the person liable to pay tax, the test laid down by the Court was to find out the person entitled to that income". Again at page 578 it was observed : "No one denies that an evacuee from Pakistan has a residual right in the property that he left in Pakistan. But the real question is, can that right be considered as ownership within the meaning of Section 9 of the Act. As mentioned earlier that Section seeks to bring to tax income of the property in the hands of the owner. Hence, the focus of that Section is on the receipt of the income. The meaning that we give to the word "owner" in Section 9 must not be such as to make tha....